W-2 vs 1099 Calculator (2026)
See what a contract rate is really worth after self-employment tax, health insurance and unpaid time off, and the hourly rate you need to beat a W-2 offer.
- Free, no signup
- 2026 IRS & SSA numbers
- All 50 states + DC
How this calculator works
On the W-2 side we subtract your share of FICA (6.2% Social Security up to $184,500 plus 1.45% Medicare), federal income tax using the 2026 brackets and standard deduction, and state income tax. Employer health premiums and 401(k) match are added as benefits.
On the 1099 side we subtract business expenses, self-employment tax, the deduction for half of SE tax, self-employed health insurance, and the QBI deduction, then apply the same brackets. Unpaid time off reduces 1099 income. See the methodology for every formula and source, or use the freelance tax calculator if you only have 1099 income.
Frequently asked questions
How much more should a 1099 contractor charge?
Usually 25–50% more per hour than the equivalent W-2 hourly wage. A contractor pays both halves of Social Security and Medicare (15.3% instead of 7.65%), buys their own health insurance, gets no 401(k) match, and is not paid for vacation or holidays. Use the calculator above to get your exact break-even rate.
What is self-employment tax in 2026?
Self-employment tax is 15.3% of 92.35% of your net earnings: 12.4% Social Security on earnings up to the 2026 wage base of $184,500, plus 2.9% Medicare with no cap. An extra 0.9% Medicare tax applies above $200,000 (single) or $250,000 (married filing jointly). You can deduct half of self-employment tax when figuring income tax.
Is 1099 or W-2 better?
It depends on the rate. At the same hourly pay, W-2 is almost always better because the employer pays half of FICA and provides benefits. 1099 work comes out ahead only when the rate is high enough to cover the extra tax, health insurance, and unpaid time off.
How much should I set aside for taxes as a 1099?
Many contractors set aside 25–35% of profit. The calculator shows a suggested percentage based on your federal, state, and self-employment tax.
What is the QBI deduction?
The qualified business income deduction (Section 199A) lets many self-employed people deduct up to 20% of business income. For 2026 it phases out for specified service businesses between $201,750 and $276,750 of taxable income ($403,500 to $553,500 married filing jointly), and there is a $400 minimum deduction when QBI is at least $1,000.
When are 2026 quarterly estimated taxes due?
Generally April 15, 2026, June 15, 2026, September 15, 2026, and January 15, 2027. These dates are from the 2026 Form 1040-ES. You can skip the January payment if you file your 2026 return by February 1, 2027 and pay the full balance.
Can I deduct health insurance as a 1099?
Yes. If you are self-employed and not eligible for an employer plan, you can usually deduct health insurance premiums for yourself and your family, up to your net self-employment profit.
What is the 2026 Social Security wage base?
$184,500, according to the Social Security Administration. Earnings above that are not subject to the 12.4% Social Security portion of self-employment tax.